CB1 Business Finance
Corporate finance, financial statements, and capital structure: the business context for every actuarial decision.
About CB1
CB1 teaches you how companies raise capital, how financial statements work, how banks and insurance companies are regulated, and how corporate decisions interact with markets. For actuaries working in consulting, capital management, mergers, or board-level advisory, CB1 is the language you need to speak fluently.
Who is this for?
Can be taken at any stage. Many students take CB1 alongside a CM paper as a change of pace. Students with a commerce or business background often clear this quickly, sometimes in 6–8 weeks.
160 days until CB1, April 2027
CB1 21 Apr · entry closes in 85 days
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Learn CB1 free — 16 worked explainers
One idea per page, explained from scratch, each ending in a worked example with the arithmetic shown in full. These are the ideas students most often get stuck on in CB1. Start anywhere.
- Why financial reporting is regulated, and who it is regulated for Explain the information asymmetry between a company and its investors, show numerically why it drives good companies out of the capital market, and say what disclosure, audit and board governance each contribute
- Share capital and loan capital: why each source costs what it does Work out the cost of each source of finance, including the after-tax cost of debt two ways, and explain why the ordering between them is always the same
- Leasing against buying, and the only comparison that settles it Compare leasing with buying by discounting the after-tax cash flows, two independent ways, and find the lease payment at which the two break even
- Profit is not cash, and why a growing company can run out of money Explain why profit and cash flow differ, reconcile three years of profit to three years of cash using the movement in working capital, and say which question each of the three financial statements answers
- Return on capital employed, and the two things that drive it Calculate return on capital employed, decompose it into operating margin and asset turnover, and use the decomposition to compare businesses with very different margins and to say which lever a manager is pulling
- Gearing: why borrowing magnifies a shareholder return in both directions Calculate return on equity for different capital structures, find the break-even operating profit at which gearing neither helps nor hurts, and use the geared-return formula to predict the effect of borrowing more
- Modigliani-Miller: why gearing does not create value, and what does State and apply both Modigliani-Miller propositions, show the weighted average cost of capital is unchanged without tax, and value the tax shield when there is tax
- Dividend irrelevance, and the four reasons dividends still matter Show that a dividend, a share sale and a buyback leave a shareholder equally wealthy, and name the frictions that break the irrelevance result
- The cost of capital, and why a project must beat the whole pot Calculate a weighted average cost of capital including the tax relief on debt, use it as a discount rate, and show why appraising a project against the cost of the cheapest source of finance accepts projects that destroy value
- NPV against IRR, and the three times IRR gives the wrong answer Calculate net present value and internal rate of return, recognise the three situations in which IRR ranks projects wrongly, and use an incremental appraisal to show which project a shareholder should prefer
- Working capital: the days between paying out and being paid Calculate inventory, receivable and payable days and the cash operating cycle from a set of accounts, convert each leg into the money it ties up, and quantify the extra funding that growth requires
- Valuing a company: discounted cash flow against comparable multiples Value a company by discounted cash flow with a terminal value, check it against a comparable multiple, and say which assumption the answer actually rests on
- Synergies and the takeover premium: who actually gets the gain Split the gain from a takeover between buyer and seller, find the break-even price, and explain why acquirers systematically overpay
- Company tax in an appraisal, and the relief that reverses the answer Build after-tax project cash flows including capital allowances, value the allowance tax shield separately, show the effect of paying tax a year in arrears, and avoid double-counting the relief on interest
- Interest rate swaps: fixing a floating cost, and where the saving comes from Work out the net cost of a swapped borrowing in each year, and split the comparative-advantage gain between two counterparties
- Hedging currency risk: the forward contract and the money-market hedge Hedge a foreign currency payment with a forward and with a money-market hedge, and show the two cost the same when interest rate parity holds
Every page is written by S.MONK and free to read. Nothing here asks for an email address.
Complete Syllabus
- Sources of finance: equity, debt, hybrid instruments, preference shares, retained earnings
- Financial statements: income statement, balance sheet, cash flow, ratio analysis, IFRS
- Capital structure: Modigliani-Miller theorems, WACC, trade-off theory, pecking order
- Dividend policy: dividend irrelevance theorem, signalling, share buybacks, taxes
- Mergers and acquisitions: DCF and comparables valuation, synergies, takeover regulation
- Project appraisal: NPV, IRR, payback, profitability index, real options introduction
- Risk management: financial derivatives for hedging, interest rate swaps, FX risk
- Regulation: Basel III, Solvency II, IRDAI capital requirements, systemic risk
- Behavioural finance: market anomalies, biases, limits to arbitrage
Career Outcomes
Actuarial Consultant, Capital Management Analyst, Corporate Finance (senior career)
₹4–7 LPA with CB1 cleared alongside CM papers
CB1 is more essay-style than CM papers. Practice writing concise, structured answers. Ratio analysis questions are frequent, so know all key ratios and their interpretations.
“I had a commerce background and cleared CB1 in six weeks with S.MONK recorded sessions. Much faster than self-study. The topical breakdown in each session is perfect for the exam format.”